FL Partners' exit from yacht maker Sunseeker to Dalian Wanda is the latest in an increasing trend of outbound acquisitions by a Chinese corporate involving private equity.
The Chinese entertainment and property conglomerate has invested £320 million (€372 million; $495 million) in Sunseeker, providing an exit for Irish private equity firm FL Partners, according to a statement from Dalian Wanda.
Dalian Wanda made a similar deal in September last year, when it acquired US-based AMC Entertainment from private equity firms Apollo Global Management, Bain Capital, The Carlyle Group, CCMP Capital Advisors and Spectrum Equity.
The firm is now targeting the UK and has said it will also develop a real estate project in Central London that will include a luxury hotel, taking the combined investment to £1 billion. Dalian said it will be the first luxury hotel opened by a Chinese firm overseas.
Dublin-based FL Partners invested £25 million in Sunseeker in 2010, refinancing the company’s existing debt with a long-term package from Macquarie Bank and Haymarket Financial, media reports said at the time.
The business has focused on its global distribution network and seen “dramatic growth” since the mid-2000s largely due to newer yachting markets in Asia, Russia and Latin America, according to FL Partners.
Its website says, “FL’s key to success in executing this transaction lay in its ability to take a view on a highly complex situation and identify early on that the existing banking relationship was broken, thus enabling us to build relationships with
Sunseeker: China's latest foray into private
multiple counterparties and execute our plans against a demanding deadline. We introduced new banks with no legacy agenda and motivation to do the deal and brought in investors who understood the business and knew our track record.”
Chinese companies have been making acquisitions overseas providing both partnership and exit opportunities for private equity firms. During 2012, $5.9 billion worth of private equity-backed cross-border deals closed, 61 percent more than the $3.6 billion deals closed during 2011, according to data from Thomson Reuters.
This year, in May, Chinese conglomerate Fosun International acquired an undisclosed stake in Israeli technology firm Alma Lasers from global private equity firm TA Associates. Fosun bought the company at an enterprise value of $220 million, Private Equity International reported earlier.
The luxury and tourism sectors have been particularly attractive to Chinese buyers as distress in Europe continues and companies look to take advantage of the growing consumer base in China, according to André Loeskrug-Pietri, founder and managing partner at cross-border firm A Capital.
In May, A Capital sold its stake in French resort operator Club Méditerranée to Fosun, which together with AXA Private Equity acquired all outstanding shares in the business in a $700 million deal. Today, Club Med is facing challenges in Europe’s difficult tourism market, particularly in France and the move into emerging markets is critical, according to an earlier statement from the firm.
However, these deals are not without challenges, industry sources say. Chinese companies still have a questionable reputation overseas, demonstrated by some members of the US Congress that opposed the recent CDH Investments-backed Shuanghui International bid to buy US pork producer Smithfields Group for $7.1 billion, due to food safety concerns.